Health Care Price Transparency: Will We Change Behavior?

April 15, 2019|

At the forefront of media-driven political rhetoric is the progressive idea of “Medicare for all.” Why have 106 House Democrats pushed forward with a new legislative bill to cover everyone through Medicare?

The quick and easy answer is out-of-control cost. We could certainly debate a number of different answers to that question, but cost is by far the most glamorous and gregarious at the same time.

The most recent statistics show that Americans spend 17.7 percent of gross domestic product (GDP) on health care expenditures. Unfortunately, the number seems to climb each year, with nothing to stop its insurmountable ascent.

The Trump administration is considering publicizing the negotiated rates payers (insurance companies, HMOs, etc.) make with providers for health care services, drugs and medical devices, according to a request for comment tucked in the middle of a 700-page Office of the National Coordinator for Health Information Technology (ONC) interoperability rule released last month.

This past year, Secretary of Health and Human Services Alex Azar made price transparency one of his top policy priorities by advancing a new regulation requiring hospitals to publicize how much they charge for procedures and treatments. The charges represent list prices, which are basically inflated amounts that consumers and payers never actually pay due to negotiated managed care contracts.

Furthermore, the required disclosures use opaque terminology and old acronyms that are simply burdensome for the hospital to explain and confusing for the consumer/patient to understand. Perhaps even more perplexing is the fact that the list price reveals nothing about quality. Shouldn’t patient safety and well-being (outcomes) correlate with pricing?

Ultimately, those aspects of quality have little to do with the managed care negotiated pricing.

The United States needs a system where all reputable hospital ratings systems are gathered and presented in an easy-to-read format — and accessible electronically or on paper. Consumers of health care need to know and understand what is presented so they can make the appropriate comparisons and choices. We need every hospital to participate in reporting a standardized set of metrics on pricing, outcomes and patient safety. Withholding true price and quality transparency is unhealthy for decision-makers — consumers of health care.

Let’s assume the consumer has this newfound transparent information at his or her fingertips. Here is the defining question. Will this change behavior? Simply because you have access to it, will you use it to make better-informed decisions of where to go?

The health insurance industry has directed a consumer-driven health care environment for years, yet many would say it is simply cost shifting. The power of information to make informed decisions on health care choices should be transparent and readily available.

Until it is, we should not expect behaviors in health care to change.

Leave a Reply